EX-99 2 ex99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 NEWS FROM: COOLBRANDS INTERNATIONAL, INC. 8300 Woodbine Avenue, 5th Floor Contact: Michael Serruya Markham, Ontario, Canada, L3R 9Y7 Telephone: (905) 479-8762 FOR IMMEDIATE RELEASE: July 22, 2004 COOLBRANDS INTERNATIONAL INC. REPORTS RECORD INCREASES IN REVENUES AND NET EARNINGS FOR THIRD QUARTER OF FISCAL 2004 CoolBrands International Inc. (TSX: COB.A) announced today that revenues for the three months ended May 31, 2004 increased by 128.5% to $187,170,000 from $81,908,000 for the same period last year. Net earnings for the three months ended May 31, 2004 increased by 113.5% to $19,126,000 ($0.34 basic and diluted earnings per share) as compared with net earnings of $8,957,000 ($0.17 basic and diluted earnings per share) for the same period last year. The growth in revenues for the three months ended May 31, 2004 reflected increased sales of prepackaged consumer products, including incremental sales from Americana Foods, Eskimo Pie Frozen Distribution and from the Dreamery'r' and Whole Fruit'TM' brands and the Godiva'r' brand license that were acquired in July 2003 and drayage income. Sales for the three months ended May 31, 2004 increased by 119.4% to $173,247,000 as compared with $78,978,000 for the same period last year. Drayage and other income increased to $12,854,000 for the three months ended May 31, 2004. Drayage income represents the fees paid to CoolBrands by Dreyer's/Nestle to deliver products invoiced to customers by Dreyer's/Nestle. Gross profit dollars increased to $44,204,000 for the three months ended May 31, 2004 from $33,864,000 for the period last year, a 30.5% increase. Gross profit percentage for the three months ended May 31, 2004 decreased to 25.5% as compared to 42.9% for the same period last year. Gross profit decreased for the three months ended May 31, 2004 due to the impact of lower margins generated by Americana Foods' manufacturing operations and Eskimo Pie Frozen Distribution's distribution operations and due to the impact of increased cost of butterfat. Selling, general and administrative expenses for three months ended May 31, 2004 declined as a percentage of revenues to 13.5% as compared to 27.1% for the same period last year. Cash and short-term investments increased to $97,486,000 at May 31, 2004 from $30,140,000 at August 31, 2003. Working capital improved to $149,835,000 at May 31, 2004 from $85,734,000 at August 31, 2003. CoolBrands' current ratio improved to 2.2 to 1 at May 31, 2004 from 2.1 to 1 at August 31, 2003. Commenting on the results, David J. Stein, President and Co-Chief Executive Officer of CoolBrands International Inc. stated, "Our results for the third quarter continue to reflect the successful integration of the assets and businesses we acquired in 2003 and the ongoing growth of our base business. Our expanded portfolio of brands, as well as our new distribution and manufacturing operations, all contributed to the dramatic increase in the size and profitability of CoolBrands during the quarter." CoolBrands International Inc. Consolidated Balance Sheets as at May 31, 2004 and August 31, 2003
------------------------------------------------------------------------------------------------------- (in thousands of dollars) May 31, August 31, 2004 2003 (Unaudited) $ $ ------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and short term investments 97,486 30,140 Receivables 88,401 60,807 Receivables - affiliates 4,768 3,185 Inventories 74,584 55,604 Prepaid expenses 8,393 9,722 Future income taxes 3,056 1,930 ------------- ----------------------- Total current assets 276,688 161,388 Future income taxes 4,462 2,977 Property, plant and equipment 34,017 28,349 License agreements 11,771 12,357 Intangible and other assets 8,931 9,084 Goodwill 98,656 99,695 ------------------------------------ 434,525 313,850 ==================================== Liabilities and Shareholders' Equity Current liabilities: Accounts payable 67,842 27,339 Payables - affiliates 1,057 754 Accrued liabilities 32,425 33,530 Income taxes payable 7,248 5,204 Future income taxes 2,273 3,144 Revolving loan - secured 10,544 Current maturities of long-term debt 5,464 5,683 ------------------------------------ Total current liabilities 126,853 75,654 Long-term debt 27,335 38,671 Other liabilities 3,769 3,984 Future income taxes 4,936 4,722 ------------------------------------ Total liabilities 162,893 123,031 ------------------------------------ Minority interest 13,121 2,968 ------------------------------------ Shareholders' Equity: Capital stock 138,883 122,406 Contributed surplus 15,720 Cumulative translation adjustment (9,929) (8,904) Retained earnings 113,837 74,349 ------------------------------------ Total shareholders' equity 258,511 187,851 ------------------------------------ 434,525 313,850 ====================================
CoolBrands International Inc. Consolidated Statements of Earnings
--------------------------------------------------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars, except share data) For the nine months ended For the three months ended May 31, May 31, May 31, May 31, 2004 2003 2004 2003 $ $ $ $ --------------------------------------------------------------------------------------------------------------------------- Revenues: Sales 420,354 197,356 173,247 78,978 Franchising and licensing revenues: Royalty income 1,916 2,034 716 721 Franchise and license fees 807 1,446 236 352 Consumer products license fee 350 436 117 241 Drayage and other income 40,700 1,987 12,854 1,616 ---------------------------------------------------------------- Total revenues 464,127 203,259 187,170 81,908 ---------------------------------------------------------------- Operating expenses: Cost of goods sold 313,792 117,016 129,043 45,114 Selling, general and administrative expenses 82,296 57,843 25,194 22,163 Interest expense 1,638 1,451 540 373 ---------------------------------------------------------------- Total operating expenses 397,726 176,310 154,777 67,650 ---------------------------------------------------------------- Minority interest 765 577 ---------------------------------------------------------------- Earnings before income taxes 65,636 26,949 31,816 14,258 Provision for income taxes 26,148 10,081 12,690 5,301 ---------------------------------------------------------------- Net earnings 39,488 16,868 19,126 8,957 ================================================================ Earnings per share: Basic 0.71 0.33 0.34 0.17 ================================================================ Diluted 0.70 0.32 0.34 0.17 ================================================================ Weighted average shares outstanding: Shares used in per share calculation - basic 55,291 51,740 55,777 51,757 Shares used in per share calculation - diluted 56,337 53,492 56,880 53,946
CoolBrands International Inc. Consolidated Statements of Cash Flows
---------------------------------------------------------------------------------------------------------------------------------- (Unaudited) (in thousands of dollars) ---------------------------------------------------------------------------------------------------------------------------------- For the nine months ended For the three months ended May 31, May 31, May 31, May 31, 2004 2003 2004 2003 $ $ $ $ ---------------------------------------------------------------------------------------------------------------------------------- Cash and short term investments provided by (used in): Operating activities: Net earnings 39,488 16,868 19,126 8,957 Items not affecting cash: Depreciation and amortization 4,392 3,726 1,461 1,196 Future income taxes (1,673) 1,342 627 675 Loss of asset held for sale 403 403 Minority interest 765 577 Contributed surplus 15,720 4,333 Changes in current assets and liabilities: Receivables (27,488) 2,554 (21,532) (3,644) Receivables - affiliates (1,546) (2,155) (1,549) (2,882) Allowance for doubtful accounts 514 (711) 106 (159) Inventories (18,539) (9,839) (13,621) (1,730) Prepaid income taxes 406 Prepaid expenses 1,299 399 (2,216) 1,597 Accounts payable 39,559 3,090 36,859 936 Payables - affiliates 296 1,458 392 1,788 Accrued liabilities (1,080) (3,456) (866) (1,774) Income taxes payable 2,002 (7,081) 7,026 (300) Other assets 128 659 (24) 622 Other liabilities (210) (929) (12) (429) ---------------------------------------------------------------------- Cash provided by operating activities 53,627 6,328 31,093 5,256 ---------------------------------------------------------------------- Investing activities: Increase in notes receivable (1) Repayment of notes receivable 30 305 6 60 Purchase of intangible assets (70) (21) Purchase of license agreements (393) 4 Purchase of leasehold improvements and equipment (10,946) (3,853) (4,891) (970) Proceeds from the sale of asset held for sale 3,396 3,396 ---------------------------------------------------------------------- Cash (used in) provided by investing activities (11,379) (153) (4,902) 2,486 ---------------------------------------------------------------------- Financing activities: Expenses for special warrants (144) Proceeds from issuance of Class A and B shares 16,477 64 199 Capital contributions from (repayment to) Partnership's minority partner 8,891 (18) Change in revolving loan - secured 6,344 2,742 3,006 2,742 Repayment of long-term debt (6,652) (7,543) (1,366) (3,393) ---------------------------------------------------------------------- Cash provided by (used in) financing activities 25,060 (4,881) 1,821 (651) ---------------------------------------------------------------------- Increase (decrease) in cash flow due to changes in foreign exchange rates 38 (10,418) 2,776 (8,054) ---------------------------------------------------------------------- Increase (decrease) in cash and short-term investments 67,346 (9,124) 30,788 (963) Cash and short-term investments - beginning of period 30,140 47,086 66,698 38,925 ---------------------------------------------------------------------- Cash and short-term investments - end of period 97,486 37,962 97,486 37,962 ======================================================================
CoolBrands International Inc. Summary Financial Data
---------------------------------------------------------------------------------------------------------------------------------- (in thousands of dollars, except share data): For the nine months ended For the three months ended May 31, May 31, May 31, May 31, 2004 2003 2004 2003 $ $ $ $ ------------------------------------------------------------------------------------------------------------------------------- Revenues 464,127 203,259 187,170 81,908 Earnings before income taxes 65,636 26,949 31,816 14,258 Provision for income taxes 26,148 10,081 12,690 5,301 ------------------------------------------------------------------- Net earnings 39,488 16,868 19,126 8,957 =================================================================== Basic earnings per share: .71 .33 .34 .17 Diluted earnings per share: .70 .32 .34 .17 Depreciation and amortization 4,392 3,726 1,461 1,196 Interest expense 1,638 1,451 540 373 Weighted average number of shares outstanding: Shares used in per share calculation - basic 55,291 51,740 55,777 51,757 Shares used in per share calculation - diluted 56,337 53,492 56,880 53,946
About CoolBrands International: CoolBrands International is a leader in the consumer products and franchising segments of the frozen dessert industry, marketing a diverse range of frozen dessert products under nationally and internationally recognized brand names. CoolBrands is the pre-eminent company in the fast-growing "better-for-you" ice cream category with offerings such as fat free, non-dairy Whole Fruit'TM' Sorbet, Weight Watchers'r' Smart Ones'r' low-fat and fat-free frozen desserts and new Atkins'r' Endulge'TM' controlled carbohydrate super premium ice cream. CoolBrands also competes in the super premium ice cream category with the Dreamery'r' Ice Cream and Godiva'r' Ice Cream brands. In addition, CoolBrands markets a wide variety of "all family" premium ice creams, frozen novelties and frozen desserts under the Eskimo Pie'r', Chipwich'r', Tropicana'r', Welch's'r', Yoplait'r', Betty Crocker'r' and Trix'r' brand names. CoolBrands' subsidiary, Eskimo Pie Frozen Distribution, operates the second largest "direct store delivery" (DSD) ice cream distribution system in the U.S., serving these CoolBrands products and a growing family of Partner Brands to supermarkets, convenience stores and other retail customers. CoolBrands' subsidiary, Americana Foods, is a leading U.S. manufacturer and supplier of soft serve mixes, packaged ice cream, frozen yogurt and sorbet products and frozen novelties to well known national retailers, food companies and restaurant chains. Americana Foods also manufactures and sells products for the foodservice channel, which are extensively used to standardize quality and reduce labor costs in on-site food preparation. Coolbrands' Foodservice Division manufactures and sells premium soft serve ice cream and frozen yogurt to the foodservice industry. CoolBrands also manufactures and sells a full line of quality flavours, chocolate coatings, fudge sauces, powders for chocolate milk, egg nog bases and other ingredients and flexible packaging products for use in private label dairy products in addition to the Company's brands. CoolBrands also franchises and licenses frozen dessert outlets operated under a Family of Brands including Tropicana'r' Smoothies, Juices & More, Swensen's'r' Ice Cream, I Can't Believe It's Yogurt'r', Yogen Fruz'r', Bresler's'r' Premium Ice Cream, Golden Swirl'r' and Ice Cream Churn'r', with company-owned, franchised and non-traditional partnership locations around the world. This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. These statements may be identified by the fact that they use such words as "anticipate," "estimate," "expect," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, market factors, competitive product development and promotional activity, the level of consumer interest in the Company's products, product costing, the weather, the performance of management, including management's ability to implement its plans as contemplated, the Company's relationship with its customers, franchisees, licensees and licensors, governmental regulations and legislation and litigation. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.